Iceland’s Largest Car Rental – Book with Confidence

What is the minimum age to rent a car in Iceland?

To rent a standard 2WD car with Höldur Car Rental, the minimum age is 20 years old. For larger vehicles, including, minibuses, and luxury cars, the minimum driver age is 23 years old. All drivers must have held a valid driver’s license for at least one year.

Do I need a 4x4 to drive in Iceland, or is a 2WD enough?

If you plan to stay on the paved Route 1 (The Ring Road) or visit the Golden Circle during the summer, a 2WD car is sufficient. However, if you are traveling during winter (November to April) or plan to explore the Icelandic Highlands, a 4x4 vehicle is highly recommended for safety and mandatory for F-roads.

Can I drive my rental car on Icelandic F-roads?

You can only drive on F-roads (unpaved highland roads) if you rent a permitted 4x4 vehicle. Driving a 2WD vehicle on F-roads is strictly prohibited, illegal, and voids all rental insurances. F-roads are only open during the summer months.

What documents do I need to pick up my rental car?

To pick up your car in Iceland, you must present a valid driver's license (printed in Latin characters), a physical credit card in the main driver's name, and a valid passport or ID. Digital driver's licenses are not accepted.

Do I need a credit card, or can I rent a car with a debit card?

A valid physical credit card in the main driver's name is required at pick-up to hold a security deposit. While you can pay for the final rental cost with a debit card, the initial guarantee must be made with a credit card.

What car insurance do I need in Iceland?

At Höldur Car Rental (Europcar Iceland), every rental automatically includes:

• CDW (Collision Damage Waiver): Protects against major collision costs. You’ll still pay an excess/deductible if damage occurs, but you’re not liable for the full value of the car.
• Third-Party Liability Insurance: Covers injuries or damages you might cause to others — required by law.
• PAI (Personal Accident Insurance): As required by Icelandic law, our rates include Personal Accident Insurance (PAI). This coverage protects you and your passengers in the event of injury, providing compensation for disabilities or, in the unfortunate case of a fatal accident, a lump sum indemnity.
• Theft Protection: Included in our rates and covers you against theft of the vehicle.

However, because of Iceland’s unique weather and volcanic terrain, we highly recommend upgrading to our Premium protection package. It includes Gravel Protection, Sand and Ash Damage Waiver (SADW), Super CDW and zero-liability for peace of mind.

Where can I pick up and drop off my Höldur rental car?

We offer convenient pick-up and drop-off locations across Iceland, including directly in terminal at Keflavík International Airport (KEF), in downtown Reykjavík, and at regional airports such as Akureyri and Egilsstaðir.

What are the most important driving rules in Iceland?

In Iceland, you drive on the right. Headlights must be turned on at all times, day and night. Off-road driving is strictly illegal and carries massive fines to protect fragile nature. The general speed limit is 50 km/h in cities, 80 km/h on gravel roads, and 90 km/h on paved highways.

How does the new Iceland road tax work for rental cars?

Iceland’s new road tax is a "pay-as-you-use" model based on the distance you drive. The rate is ISK 8.81 per kilometer (approx. €0.06 / $0.07) for all vehicles under 3.5 tons, including electric, hybrid, petrol, and diesel cars. This amount includes administration, collection fees, and tax. Höldur Car Rental calculates your total distance at drop-off and charges the tax directly to your credit card. To balance this tax, the government has significantly lowered fuel prices at the pump.