You’ve dreamed of visiting Iceland and driving through its dramatic landscapes, waterfalls, volcanoes, black sand beaches, and wide-open roads. But once you start planning, reality hits car hire in Iceland can be expensive.
The good news? With the right approach, cheap car rental in Iceland is absolutely possible. These practical, local tips will help you cut costs, travel smart, and still enjoy a smooth self-drive adventure.
1. Travel Outside Iceland’s Peak Season
Summer is the most popular time to visit Iceland, which means higher prices for accommodation, tours and car rental. Demand drives prices up quickly, especially for smaller and cheap cars.
What many travelers don’t realize is that Iceland’s climate is milder than expected, thanks to its maritime influence. Winter temperatures often hover around freezing rather than plunging to extremes.
Why off-season car rental is cheaper:
- Lower demand means better daily rates
- More availability of small and economy cars
- Fewer crowds at major attractions
With winter tires, regularly maintained roads, and reliable weather and road condition updates, driving outside peak season is very doable. Many travelers even prefer it, as Iceland feels quieter, more authentic and less rushed.
2. You Don’t Always Need a 4×4 Rental Car
A 4×4 rental car in Iceland is essential for F-roads, but many popular itineraries don’t require one.
If your trip focuses on:
- The Golden Circle
- Reykjavík and nearby areas
- The South Coast
- The Ring Road in summer
A 2WD car is often perfectly sufficient.
Choosing a smaller, fuel-efficient car can significantly reduce:
- Daily rental cost
- Fuel expenses
- Insurance price
Unless you’re planning gravel-heavy routes or mountain driving, don’t automatically upgrade to a 4×4. It’s one of the easiest ways to keep your Iceland road trip budget under control.
3. Save money by Limiting Extra Drivers
Adding an extra driver is convenient, but it’s also one of the most common optional extras that increases car hire costs.
If one person is happy to do the driving, skipping the additional driver fee is a simple way to save money without changing your itinerary.
Important safety note:
If there’s any chance someone else will drive, add them upfront. An unregistered driver is not covered by insurance, and any damage or accident can become extremely expensive.
4. Skip the GPS Rental (Plan Ahead Instead)
GPS rental is another cost that adds up quickly. But in many cases, you don´t need it.
Smart alternatives:
- Use Google Maps or Apple Maps
- Download offline maps before your trip
- Plan routes in advance
Mobile coverage is generally good along main routes, and offline maps work well in more remote areas. Being organized before you arrive saves both time and money.
5. Never Cut Corners on Car Rental Insurance
If there’s one thing you should never skip, it’s car rental insurance in Iceland.
Gravel roads, strong winds and unpredictable weather mean damage can happen, even to experienced drivers. Repair costs are high, and excess fees can be painful.
Booking a full protection package:
- Reduces excess to zero
- Protects against common Iceland-specific damage
- Offers peace of mind throughout your trip
In Iceland, insurance is not just an optional extra. It is an essential part of responsible self-drive travel. Choosing the right protection allows you to focus on the journey, the scenery, and the experience, rather than worrying about unexpected costs along the way.
6. Book Early for the Best Cheap Car Rental Deals
Car rental prices in Iceland follow simple supply and demand. As availability, drops, prices rise.
Booking early gives you:
- Access to the cheapest car categories
- More choice of small and cheap vehicles
- Better rates during peak summer months
This is especially important if you’re traveling in June, July, or August, when cheap cars sell out fast.
Flexible Booking with Firefly Iceland
One final tip: lock in your car rental early with flexible cancellation.
Firefly allows full refunds if you cancel more than 16 days before pickup, meaning there’s no financial risk to booking ahead. You secure a lower rate, better vehicle choice, and complete flexibility if plans change.
Final Takeaway: Smart Planning = Cheap Car Rental in Iceland
Getting a cheap rental car in Iceland isn’t about cutting corners, it’s about making informed decisions. Travel outside peak season, choose the right car type, avoid unnecessary extras, book insurance wisely, and reserve early.
With a little planning, your Iceland road trip can be both cheap and unforgettable.
