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I have booked a flight to Iceland. We (me and three friends) have planned to travel through Iceland by car. However, I'm shocked by the prices.

In the Netherlands, at companies like Europcar and Hertz, I can rent a decent car for €350,- for ten days. In Iceland the same companies charge me €1100,- for ten days for the same type of cars. This is almost three times the price!

I do not understand why the difference in price is so big? Am I missing something? I have checked multiple companies now (Hertz, Europcar, City Car Rental, Sixt) but all their prices seem comparably expensive.

I case someone has tips for where to search for a cheap car. I'm looking for a simple car that fits four people and some baggage for 9-10 days. Pick-up and drop off location in Reykjavik.

  • 'Why' is a bad question. Maybe rephrase it as 'rental car for less than X EUR per day'? – JonathanReez Jun 17 '15 at 21:20
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    I'm actually really interested in where the price difference comes from (compared to the Netherlands). Though I suppose for practical reasons it would be nice to know where to get a rental car for less than, say E750,-. Shall I separate these questions? Or focus on the practical aspect? (I agree why is a bit broad!) – Roy T. Jun 17 '15 at 21:23
  • I would separate them – JonathanReez Jun 17 '15 at 21:37
  • I am actually surprised by how cheap it is in the Netherlands. Even Germany or France, which have slightly lower costs of life, and far far less taxes on everything car-related are apparently more expensive (not Iceland-level of course but still). – Relaxed Jun 18 '15 at 6:51
  • @Relaxed: 350 EUR for 10 days is cheap? This month, in Glasgow, UK, I rented a Ford Focus diesel for 10 days for 93 GBP, which is 104 EUR. Not a major company, just a small local one. I had to agree to a 1500 GBP insurance excess (blocked 1250 GBP on my credit card), if I would like to remove the excess the price would be more then double. – yannn Oct 23 '16 at 11:10
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'Expensive' is relative. That said, a quick search on https://book.cartrawler.com saw me get prices for under 500 euros for ten days. Still not very pleasant, but better than 1100 euros.

Your question is really asking why Iceland is so expensive, as the relatively high cost of things in Iceland is not limited to just car rentals.

Numbeo shows that the cost of living in Iceland is about 30% higher than in the Netherlands.

In addition, the cost of getting a car to Iceland and maintaining a car in Iceland will be significantly higher than doing the same on the European mainland: cars need to be shipped farther, in small numbers and suffer from much more corrosive weather.

Furthermore, because it's not as likely that small cars are too usable in Iceland, outside of the city, because weather and road conditions can be quite harsh, it's more likely that the smallest models available in the Netherlands will not be available in Iceland.

So, based on the above points, it would be reasonable to expect the cost of renting a car in Iceland to be significantly higher.

  • When I rented a car in Iceland in 2009, I got a 4WD diesel wagon with studded tyres from Hertz. I think that was a pretty normal offering. (Can't recall how much I paid though.) – Greg Hewgill Jun 17 '15 at 22:39
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    I would point out that the weather itself (in Iceland) is not generally corrosive.... – CGCampbell Jun 18 '15 at 3:03
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    The prices I compared were from the exact same models. So the type of cars is not the issue. The 30% higher cost of living, according to Numbeo, (interesting find!) still doesn't explain the 200% higher prices for rental cars. However, after reading your answer, and doing some more research. I do believe the higher write-off and the short holiday season might be other causes. Thanks for the tip about cartrawler.com. I didn't know that site. Could save me a lot of money :). – Roy T. Jun 18 '15 at 6:07
  • "cars need to be shipped farther": not those made in North America. – phoog Jun 18 '15 at 6:10
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    You will struggle to rent small cars in Iceland. Rental companies are reluctant to rent these as the terrain, weather and conditions are not suited for them. The tend to rent out larger vehicles for safety of the drivers and passengers despite what you might see on their websites. – davidb Jun 18 '15 at 12:01
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Tips to rent for cheaper

Last time I went I rented with SADCars. Compared to North American prices I still found it expensive, not to mention the horrifying price of gas (2.5CAD/L), but a much more palatable alternative to the more established companies.

They rent some old cars with high mileage, some not very pretty, but mine did about 2000km without problems.

I also met a couple of Germans who had ferried their own car from the continent to Seyðisfjörður and travelled with it there. Whether or not that's cheaper than renting locally would depend on the length of your trip. Check Smyril Line prices for ferrying a car from Denmark to Iceland.

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    Are you saying you drove 4000km in Iceland? How many times did you go around the island? :) – MastaBaba Jun 17 '15 at 23:37
  • @MastaBaba wait that's not right, it's probably more like 2k, went around once and spent a week in the Westfjords – blackbird Jun 18 '15 at 2:58
  • Seems the gas prices are fairly similar to those in the Netherlands then ;)(2.5CAD is roughly E1.8). Thanks for the tip about SADCars. I did read some extremely mixed reviews that scare me a bit. But for a couple of youngsters it might be a very good option. – Roy T. Jun 18 '15 at 6:10
  • If you hire from sadcars check it very carefully before you leave the depot. I've hired from them in the past and whilst it managed the 1500km we asked of it (in 10 days) we weren't entirely convinced it would get back ok. – Phil Jun 18 '15 at 8:33
  • Ferry is very expensive, so you'd have to stay pretty long for it to be worth it. – gerrit May 21 at 22:21
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I believe Iceland has the most road (by length) per person meaning a little money has to go a long way in maintenance. And priority will be given to those roads that are totally impassable rather than just poorly maintained. Whilst technically being a road quite a bit of it is gravel track and full of pot holes. This will increase wear and tear on a car massively.

The main tourist season is also only a couple of months long so they don't have long each year in which to recoup costs.

The number of new cars bought each year in Iceland will be relatively small compared to a more populous country so there won't be the same savings due to volume shipping used in other countries.

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