Because public transportation is non-existent outside of Reykjavik, renting a car is the cheapest way to see Iceland. Renting a car on the island is cheaper than the sightseeing tours sold through the tourist information centers, and gives you a lot more flexibility to explore Iceland. Below are several ways to rent a car in Iceland without blowing your travel budget.
Search online: You can cut your costs significantly by booking your Iceland car rental online. By booking through Hertz.com we were able to cut our savings by 50%. Even the walk-in quotes were still considerably more expensive than booking online. The cheapest Iceland rental car company we found was SADcars.com, which gives its customers a 15% discount if they book through their online website.
Get your rental car at Keflavik International Airport: The airport is located approximately an hour from Reykjavik, so in order to get to the city you can either pick up your rental car at the airport or pay $ 20-$ 25 each way to get to and from the airport on the shuttle bus.
Extend your rental: By renting your car for more than a few days, you will be able to cut your rental fees drastically.
Don’t buy it: You don’t need theft insurance for the vehicle. According to our agent at Hertz, car thefts in Iceland are rare and he actually told us not to bother with any of the additional insurance (yes, they have insurance for ash from the volcano) either, so we didn’t.
Petrol Blues: When considering renting a car be sure to factor in the cost of gas. In Europe, petrol is sold by the litre not the gallon; therefore, expect to pay about $ 5 per gallon.
The low season: The off-season in Iceland, Sept. 1 to May 31, is the best time to rent a car in Iceland, because the cost of the rental car can drop by more than 50% during this time period.