How to Save Money on Iceland Car Rental

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Small Hyundai i10 economy rental car from Blue Car Rental on famous Iceland ring road with landscape in window

In the summer of 2018, we completed the famous Iceland ring road trip in under a week. We rented a small vehicle from Blue Car Rental that was more than enough for our trip. In this Iceland car rental review, we share our experience with Blue Car Rental and why we chose this company for our trip. We also talk about what to expect while driving on Iceland’s ring road.

Booking Vehicle with Blue Car Rental on a Budget

Here is a short background for our Iceland Ring road trip. We actually had no plans to visit Iceland. But, we were flying by Icelandair to another European destination. The airline offered us a free 7-day stopover for sightseeing. When my wife and I saw this offer, we were like: “Hey, why not?”. And so, the planning began.

We wrote a separate post on our Iceland Ring Road trip where we share our itinerary and places we visited and stayed at. There, you can download a complete map of our Iceland ring road trip. The blog post also details our total cost, accommodations and other useful information.

Kirkjufell mountain with Kirkjufellsfoss waterfall at Grundarfjordur village on Snaefellsnes Peninsula in West Iceland
Kirkjufell mountain with Kirkjufellsfoss waterfall at Grundarfjörður, Iceland

Besides thinking about the places we wanted to see, the first order of business was to rent a car. I began my search for Iceland car rental companies on Kayak, Expedia, Priceline and others. The first thing I noticed was how high the prices were. Also, the price quotes did not include certain valuable insurances specific to Iceland.

But then I started googling Iceland car rentals on a budget. One of the first companies that popped on my radar was Blue Car Rental.

Why Blue Car Rental?

One thing that immediately stood out was Blue Car Rental’s competitive rates. The total cost of renting from Blue Car Rental was at least 10% to 20% cheaper compared to its large competitors. Their rates also included a super collision damage waiver, theft protection and gravel protection. Out of all these, the most valuable insurance is the gravel protection. I will explain why shortly.

The company has been operating since 2010 and it is the largest local car rental company in Iceland. Blue Car Rental offers the newest fleet of a wide range of vehicles. Their office is located in Keflavik International Airport. They also have a car rental office in Reykjavik.

Blue car rental company for renting cars for Iceland Ring road trip

We chose the Toyota Aygo with automatic transmission and unlimited mileage. What we actually got was a Hyundai i10, which was a cute compact car perfect for the two of us. Here is a breakdown for our car rental cost with Blue Car Rental.

Iceland ring road car rental from Blue Car Rental total cost breakdown including sand and ash insurance, extra driver
Foreign exchange of 98.02 USD/ISK in Spring of 2018

We looked up current prices in ISK for car rentals and they seemed to be higher. However, since then, the Icelandic Króna depreciated by over 40%. As of February 2023, 1 USD can buy you ISK142. So when you convert ISK prices to USD in 2023, the car rental rates in USD at Blue Car Rental are not too far off compared to what we paid in 2018.

If we booked with another major car rental company (e.g. Avis, Budget, Alamo), we would have paid at least 20% more. Moreover, rates from Avis, Budget and others do not include valuable insurances I mentioned. Blue Car Rental includes them by default.

Coupon Codes and Discounts for Blue Car Rental

The common question that arises is whether Blue Car Rental has coupon codes or discounts. As for discounts, the answer is yes. If you book a multi-day trip, Blue Car Rental can provide anywhere from 5% to over a 15% discount. The company applies this multi-day discount automatically during your check-out.

As for coupon codes, I scoured the internet for them when we were booking our trip and found none. I also checked shortly ago and it seems that the coupon codes I found do not work. But because the rates are already as low as they are, not having a coupon code should not be a problem. 

Our Experience with Blue Car Rental

When we were booking our rental several months ahead of our trip, we paid in advance for our reservation. But, you do not have to. You can pay when picking up your rental car. Blue Car Rental offers free cancellation. There are no hidden costs either. So, we were not too worried if we had to cancel our reservation for some reason.

Krafla, Iceland volcanic landscape with winding Iceland ring road near lake Myvatn with colorful volcanic soil on hill and one car
Iceland’s Ring Road and Krafla’s volcanic landscape by Lake Mývatn

We had a very smooth and enjoyable experience with Blue Car Rental. It took us a few minutes to get from the airport to the Blue Car Rental office at Keflavik International Airport by shuttle. The check-in process was fast. We verified our rental car and noted any visible scratches in our rental agreement. We were out of the office and driving in less than 15 minutes.

Because Blue Car Rental includes many insurance protections in their rates, we had no questions asked at check-out. The company’s representative verified the car’s condition and we were out of the office on our way to airport terminal in less than 10 minutes.

What to Know About Driving Iceland Car Rental

Driving in Iceland was very easy. Many road signs use Latin letters and you can understand what they mean. There was not a single time we got confused or did not know what to do while driving. You can look up typical road signs in Europe before your trip, if you’d like.

Driver’s License Requirements for Iceland Car Rental

In Iceland, cars drive on the right side. To drive a passenger vehicle in Iceland, you need a valid driver license issued at least a year ago. Also, the driver must be over 20 years of age. But, if you’d like to rent a 4×4 4WD all-wheel-drive vehicle, you need to be at least 23 years of age. If you have a valid U.S. driving license written in Latin letters, your do not even need an international driving permit.

Road and Weather Hazards in Iceland

There are several road hazards that you need to be aware of. Iceland is notorious for its rapidly changing weather. Also, some road hazards are prevalent in certain times of the year.

Iceland’s Sand and Ash Storms

The first hazard is sand and ash storms. Because of active volcanic activity, sand and ash can be present in the air. If the air is dry with strong wind, sandstorms can develop. Sand and ash storms are most common in winter from February through April. They often happen on the Southern coast of Iceland around Vík and Skaftafell. If you get caught in a sandstorm, the damage can be severe. This can include dents, broken windows and lights, and damaged paint.

When we were there in June, we bought sand and ash protection insurance. Luckily, there were no sandstorms. Summers in Iceland tend to be wet with lots of precipitation. This prevents sand and ash storms from forming. It is up to you to buy or not sand and ash insurance. If you travel in summer, the likelihood of a sandstorm is minimal.

Gravel Rocks on Iceland’s Roads

Another notorious road hazard on Iceland Ring road is gravel. Ring road is paved for the most part, but there were a few gravel patches here and there. Also, if you plan to visit certain places outside of Iceland Ring Road, driving on gravel is inevitable. For instance, if you plan on seeing Dettifoss waterfall, there will be a gravel road.

Hverfell crater near Krafla lake Myvatn geotherm area with dirt gravel path on Iceland ring road trip
Hverfjall crater at Krafla and Lake Mývatn geothermal area, Iceland

While driving on gravel is not a problem, it becomes a hazard if you have another vehicle in front of you. One time, we had a few flying gravel rocks hit our car from a passing vehicle. There were noticeable scratches from that small accident. Because we had a gravel protection insurance, Blue Car Rental did not ask any questions.

Iceland’s Precipitations

If you are going to drive in summer, like we did, expect a lot of rain and even snow. There was rain for several days when we visited Jökulsárlón Glacier Lagoon in Southeastern Iceland. One time, when we climbed a mountain in our car, snow started falling out of nowhere.

Iceland’s Ring Road is a relatively quiet road with very little traffic. You will be driving through some remote areas, sometimes with no cell phone coverage. There will be only nature around you. Besides that gravel accident, rain and snow, we did not encounter any other weather hazards. But again, we were there in mid-June and summers have less hazardous weather.

Icelandic Sheep on Iceland Ring Road

Another real road hazard you will come across almost for sure is Icelandic sheep. There are over 800,000 sheep roaming the country’s pastures in summers. Compare this to about 327,000 Icelanders. For this reason, when you drive along ring road in the countryside, sheep will be everywhere.

Portrait of black Icelandic sheep at farm field in South Iceland on ring road trip
Icelandic sheep spotted off Iceland Ring Road

Settlers from Norway brought the Icelandic sheep around the 10th century AD. These sheep belong to the Northern European short-tailed sheep breed. This breed is less common in Europe these days.

Many farmers let their sheep roam hills and traverse mountains throughout the summer. By September, farmers round up their sheep and keep them inside for the winter. While sheep roam and graze peacefully, sometimes stray sheep can run off to the road out of nowhere. When you drive, be aware of this hazard and give sheep the right of way.

Iceland’s High Gas Prices

And the final thing that we will mention here is the gas prices. Gasoline is very expensive in Iceland. This is due to high transportation cost and no domestic oil production in the country. Gas prices can be at least 2 times more expensive than they are in the United States. While not the largest expense, we paid $300 for gas on our trip.

Concluding Remarks

That is it for our review of Blue Car Rental and our tips for driving the famous Iceland Ring road. I hope you will enjoy your upcoming trip to Iceland and its beautiful nature.

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