Summarise (click here)
Car Specs
- Seats up to 5 passengers (though 4 is recommended).
- Manual transmission.
- 2WD (front-wheel drive), compact city car.
- Space for 1 large suitcase.
- Air conditioning and basic safety features.
Who It’s Suitable For
- Solo travellers or couples on a budget.
- Small groups wanting a cheap and fuel-efficient car.
- Best for city driving and short road trips around Iceland.
Where It Can Go in Iceland
- Good on paved main roads including Ring Road in summer.
- Great for Reykjavík, Golden Circle, and paved sightseeing routes.
- Not allowed on F-roads or highland routes.
- Handles normal gravel roads carefully, but not designed for off-road.
Good to Know
- A very budget-friendly option for exploring Iceland’s main attractions.
- Ideal for short stays or layovers where only basic travel is planned.
Rent a new manual Toyota Aygo, enjoy your Iceland road trip at minimum cost. The manual transmission Toyota Aygo is a cheap 2WD car perfect for paved roads in Iceland. If you plan for a budget summer road trip, stopping over in Iceland for half or a whole day and looking for an affordable yet comfortable city car, our newToyota Aygo would be your best choice.
Is It Worth Renting A Small Car In Iceland?
The Toyota Aygo rental in Iceland is one of the best options for travelers searching for a small car rental in Iceland or an economy car hire at Keflavík Airport. Compact, fuel-efficient, and budget-friendly, the Aygo is perfect for visitors asking, “Is it worth renting a small car in Iceland?” or “What is the cheapest small car rental in Iceland?” With seating for four and space for light luggage, it’s ideal for couples or solo travelers who want to explore Reykjavík, the Golden Circle, or even complete the Ring Road in summer.
While not designed for F-roads or snowy highland routes, this affordable compact car rental in Iceland handles the main roads safely, especially during April–September. If you’re planning short trips, city drives, or a summer self-drive Golden Circle day tour, the Aygo is one of the most reliable and cheap small car hire options in Iceland, making it a smart choice for budget-savvy travelers.
Driving in Iceland
Familiarise yourself with how to drive in Iceland. Get trusted tips from locals with a lot of experience.
4×4 Iceland Car Rental Guide
What Makes 4×4 the Most Recommended Car Type for Driving in Iceland
FAQ
- Can you drive a small car on the Ring Road in Iceland?
Yes, you can drive a small car on the Ring Road in Iceland, especially during the summer months when roads are clear and well-maintained. Just avoid F-roads and highland areas, which legally require a 4×4 vehicle.
- Is a 2WD small car enough for summer in Iceland?
Yes, a 2WD small car is enough for summer in Iceland, as most main roads and the Ring Road are fully paved and easy to drive. It’s a budget-friendly option for exploring popular routes like the Golden Circle and South Coast.
- What months do I need a 4×4 in Iceland?
You need a 4×4 in Iceland mainly from October to April during the winter months. You also need a 4×4 during the summer if you plan on exploring the highland F-roads.
- What is the new kilometer tax / road tax fee in Iceland?
As of January 1st 2026 the Icelandic government is replacing part of the traditional fuel-based road tax with a usage-based system (“kílómetragjald”), calculated per kilometer driven and adjusted by vehicle weight. All vehicles using Icelandic roads, including rental cars, are required to contribute through this kilometer-based charge to support road maintenance and future infrastructure.
- What is the new kilometer tax / road tax fee in Iceland?
As of January 1st 2026 the Icelandic government is replacing part of the traditional fuel-based road tax with a usage-based system (“kílómetragjald”), calculated per kilometer driven and adjusted by vehicle weight. All vehicles using Icelandic roads, including rental cars, are required to contribute through this kilometer-based charge to support road maintenance and future infrastructure.
- Why is Thrifty Car Rental Iceland charging it?
The tax applies to all standard passenger cars and SUVs under 3.5 tonnes, as well as heavier vehicles in higher weight categories, with rates defined by law for each class. It applies to both Icelandic residents and visitors, including tourists renting a vehicle from Thrifty Iceland for a short stay or a longer road trip such as the Ring Road.
- Is it included in the daily rate?
The Road Tax appears as its own line item at these points:
- On your rental agreement at the check-in desk
- On your final invoice after drop-off
This clear separation helps show exactly what portion of your total cost is the government-mandated tax versus your actual rental service.
The charge applied to your rental agreement consists of two clear parts:
- Government Road Tax: The mandatory fee set by the Icelandic Parliament.
- Thrifty Service Fee: Covers the administrative cost of processing, reporting, and remitting these taxes to the government.
Rate (Per KM) Government Road Tax 6.95 ISK (Approx . 0.056 USD / 0.047 EUR) Thrifty Service Fee 1.40 ISK (+ VAT) (Approx . 0.011 USD / 0.0095 EUR) - Where do I pickup my rental car?
Our desk is located directly inside Keflavik International airport.
Just head to the Hertz rental desk in the arrivals hall, and you will be hitting the Icelandic roads in no time. Thrifty is serviced by Hertz Iceland, so everything is in one easy spot and to the highest standard.
We also have pickups available at Reykjavik Domestic Airport, Akureyri, Egilsstaðir, and Ísafjörður.
- What is your cancellation policy?
In case of a cancellation, the rental needs to be cancelled more than 3 days prior to rental pick up for a full refund.
If a rental is cancelled with less than 3 days notice or in case of no show the full rental price will be charged.
- 3 days or earlier – Full refund
- Less than 3 days – Non refundable
If you need to cancel your prepaid reservation please do so by sending an email to thrifty@thrifty.is stating your name and reservation number.
